Myriad Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in New Denistan, considered one of the less-developed nations in the world. How will this strategic move most likely affect Myriad Inc.?
A) It will benefit from economic arbitrage.
B) Myriad will use its competitive advantage from economies of standardization.
C) Myriad will replicate its existing business model easily.
D) It will be able to easily sell products for which demand varies by income.

Question

Quizplus · Accepted Answer

Myriad Inc. will most likely be able to benefit from economic arbitrage. Companies from wealthy countries trade with companies from poor countries to benefit from economic arbitrage, which is the exploitation of differences in the cost of labor, capital, or more industry-specific inputs. Textile companies that take advantage of the difference in labor costs to set up sweatshops in other countries are a common example.